BIZ CONFIDENCE AMONG MASS. EMPLOYERS AT 12-YEAR HIGH
By Colin A. Young
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, FEB. 7, 2017…..Despite slowdowns in the state and national economies employers in Massachusetts are more confident about the business environment than any time in the last 12 years, a survey by the Associated Industries of Massachusetts found, though there are signs of more trouble ahead.
AIM’s Business Confidence Index rose one point to 61.4 in January, the fifth straight month of improved confidence and 5.6 points higher than a year ago. It is the highest level of confidence among Massachusetts businesses since December 2004, according to AIM.
The AIM index has been issued monthly since July 1991. It is presented on a 100-point scale, with a score of 50 being neutral. The all-time high of 68.5 was recorded in both 1997 and 1998, the group said, and its low was 33.3 in February 2009. The index has remained above 50 since October 2013.
The improved confidence came after national economic growth slackened to an annual rate of 1.9 percent during the last three months of 2016 and the Massachusetts economy slowed to a 0.5 percent growth rate from 3.1 percent during the third quarter, according to AIM.
Unemployment in Massachusetts sunk to a 16-year low of 2.8 percent in December.
“The good news is that unemployment in Massachusetts remains well below the national rate of 4.7 percent,” Raymond Torto, chair of AIM’s Board of Economic Advisors, said in a statement. “But that low jobless rate may also be creating labor-force capacity constraints that are slowing output.”
Among the concerns for the business community is the availability of skilled workers. The emerging labor constraints, AIM President and CEO Richard Lord said, underscores “the importance of maintaining a world-class training and education system in Massachusetts” to ensure a pipeline of talented workers.
“As employers find it increasingly difficult to locate appropriately skilled employees, we are reminded that our economic future depends upon the ability of Massachusetts to educate all children and all incumbent workers with the knowledge our companies need to prosper in a complex global economy,” Lord said in a statement.
Helping to boost the confidence rating, economists who work with AIM said, is an improving outlook among manufacturers in Massachusetts. The Manufacturing Index climbed 2.7 points in January, AIM reported.
“One of the elements driving the overall increase in employer confidence is a rapidly brightening outlook among manufacturers,” said Dr. Katherine Kiel, professor of economics at College of the Holy Cross in Worcester. “The AIM Manufacturing Index has risen 8.5 points during the past five months, driven by a positive outlook on sales and hiring. Manufacturing optimism also bodes well for capital investment and research and development going forward.”
AIM’s Massachusetts Index, which assesses conditions within the Commonwealth, remained steady at 61.8 last month, leaving it 5.2 points ahead of the same time last year.
The U.S. Index inched up 0.1 points to 57.6 in January, AIM said, but for the 81th consecutive month employers have been more optimistic about the state economy than the national economy.
Looking ahead, AIM’s Future Index — which measures expectations six months out — rose 1.6 points to 63.3 last month. The future outlook was 6.1 points better than a year ago and higher than at any point since March 2015, AIM said.